TyroCity: Business Studies XI Notes

Importance of Business

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

1. Economic development:
Business is important for economic development. Concept of true business is used in industries and commerce. Industries use men, money, materials, methods and machines and help to create employment. Commerce is the concept of exchange goods/services at national and international levels. It helps to earn foreign currency by export business too. Therefore, business helps in economic development

2. Utilizing natural resources
Every country has diverse natural resources. Business must be directed towards proper and efficient utilization of resources. Business utilizes the resources like water, minerals, ores and so to achieve its own goals. But resources must be utilized without exploitation.

3. Creation of utility:
Business creates place and time utility. It helps to satisfy the needs of human beings. Financial utility is to be maximized.

4. Employment:
Business helps to provide job to people. It provides various types of managerial or technical job. Many types of business houses like hotels, industries, and transport companies are established for business which helps to solve the unemployment problem.

5. Revenue generation:
Business is the source of revenue generation. It pays taxes, royalties, fees, custom duties, and other things which help to generate government revenue.

6. Earning foreign currency:
It is the source of earning foreign currency. Business can earn foreign currency through exporting the goods and services.

7. Development of country:
Development of industries helps to utilize natural resources, create time and place utility, provide employment opportunities, help in revenue generation and earning foreign currency. All these things help in the development of the economy of the country and the economic development is the major factor that can develop the nation to a wider sense.

8. Provide investment opportunities:
Establishment of new industries and commercial fields are the major source of investment. Further the profit owned by the investors after the successful operation of business helps to ensure larger amount of saving which can be invested in the newer future for pension of current business or establishment of newer business. Thus, business helps in providing investment opportunities.

9. International relations:
Business is the medium for development of national and international relationship. It helps to maintain harmonious relation among the various countries. There can be mutual understanding and better diplomatic relationship among the countries. Import and export is the major base for international relationship.

10. Self-sufficiency:
It helps in achieving countries and individuals self-sufficiency. It also helps in improving the living standard of people by reducing the dependency.

Social responsibility of business

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

The major responsibilities of business are:

1. Employees

Provides better working environment to satisfy the employees
It provides salary, bonus, provident funds and job security.
It also provides financial and non-financial supports.
Enriches employees’ performance.
Provide training to develop their skills.
listen and handle their complaints and issues

2. Creditors:

Make duly payment
Satisfaction of creditors with proper relationship
Helping them to create their own market.
Entrusting the right of proper selling of goods and services of their goods
Copyright and other legal rights.

3. Customers/consumers:

Better quality of goods and services by charging reasonable price
Supply of commodities is also to be done according to needs of customer
Helps to achieve needs and wants
Provide right goods at right place in right time.
Provide proper pre-sale and post sale information
Provide proper information about new products

4. Investors:

True information about earning power of business
The objectives are to provide reasonable rate of return to shareholder.
Provide the information about plan of business.
Ensure safe investment
Promote utilization of resources without leakage
Ensure transparency of business activities

5. Government

Increase in tax i.e. Increase in government revenue
Fulfill demand of government
Non violation of rules and regulation of government.
Avoid unfair trade
Provide essential information to the government.
Solve national problems like natural calamities.
Avoid malpractice like black marketing, adulteration, smuggling

6. Society

Good environment
Employment opportunities generation.
Socio-cultural understanding
Apply anti pollution measures.

Evolution of industry and commerce

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Evolution of business

The historical development of business and its processes of development up to now is called evolution of business. Business was not evolved in one or two days. It can be studied in two ways.

Evolution of industry

It is dated with the evolution of human beings. It is as old as human civilization. It was developed through various stages.

1. Hunting stage
In ancient times people lived in caves and fulfilled their basic needs of food and clothes through hunting the wild animals in forest. They were not civilized and hovered here and there. Their needs were also limited.

2. Pastoral stage
The stage of further development of human from barbarism is called pastoral stage. This stage is basically called the age of keeping animals. Animals were used for milk, meat, wool, skin and so on beyond food and clothes. The wants went on increasing and development also started.

3. Agriculture stage
Slowly, human beings became a little bit civilized and got idea about farming and keeping cattle. This stage was the major stage of development of industry. In this stage people started to do agriculture and live in river banks. They started to cultivate crops and domesticate the animals.

Development of agriculture is divided into 5 stages they are

Handicraft stage:
It is the beginning of industrial era. It is the stage of development of industry. Simple hands made tools were also developed. Local resources were the major source of raw materials. In the beginning of this stage people were only limited to their own needs but later own surplus products were used to exchange the goods with the roods basically called barter system. Products were exchanged with product and market was starting to develop. Capital invested was minimized.
Guild stage:
It was the beginning of organized activities. Organized groups of traders, craftsmen, artisans used to collect various resources from the local areas and produced goods using them.
Age of domestic system
After the stage of guild the age of domestic system was initiated. Crafts men were not able to fulfill the unlimited and increasing wants of people by using the limited resource. So, use of hands and tools for producing quality goods was introduced. People were employed and were paid according to the units of goods produced. However, salary was very low because the value of money was much higher at that time.
Industrial revolution
It began with the replacement of old system. It is the turning point of modern industrialization. Domestic system of production was replaced by large scale factory system. There was invention, innovation. Development of scientific techniques which encouraged mass production and distribution. There were numerous job opportunities. Salary was increased and quality was maintained.
Present age
Today’s modern era with industrialization, use of technology, computerization, modernization robotizing is the most developed stage of industries. Goods are being produced meeting the demand of large number of people. There are huge number of industries producing large number of goods to meet large amount of needs and wants by providing many jobs and salaries.

Evolution of commerce

It is related with the distribution and exchange of goods and services. It is related with transportation, communication, Banking, warehousing import export, trade and so on. It links between producer and consumer. It gradually develops along with the development of human and society. There are many stages of evolution of commerce

1. Self sufficiency stage
It is the initial stage of commercial evolution. The wants are very limited. In this stage people produced goods themselves to satisfy their own basic needs. They survived through hunting and gathering foods. There was no market. There was thus no exchange of goods. They were independent.,

2. Barter system
The wants of people increased with development of society. There was both advancement and civilization of market. Self-sufficiency stage didn’t remain with advancement. They started to exchange the goods they produced with goods that other people produced to fulfill other requirements. This is called barter system. There was exchange of goods and services with goods and services.

3. Origin of money
From the beginning of barter, people felt that there was difficulty in deferred payment, commerce, divisibility and place of exchange. That’s why money was originated. People developed coins but there was difficulty in large payment. So paper money was introduced. Money was used as medium of exchange, Measurement of value, deferred payment, redistribution of income and wealth, credit system and many more. After the origin of money, national and international trade started.

4. National economy
In this stage, buying and selling of goods and services was done within the country. The local market converted into regional and city market. There was division of work and specialization. Then goods were produce not only for local people but also for national market. There was also development in banking, advertising, insurance, warehouse and other auxiliaries.

5. International economy
International economy s called global economy. The globalization of trade introduced to speed up the activities of trade in the international level. It is not possible for a country to produce all demanded goods according to needs and wants. Therefore, the countries started to import the goods and other countries exported. Slowly, import and export was introduced in all counties. Trade started to extend in world market. WTO (world trade organization) was also established to control the level of import, export and evils associated with them.

Principles of Record Management

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

1. Principle of purpose
While maintaining the record, the purpose of record keeping should be clear. Records without purpose are a waste of time, labor and money. The purpose of record keeping should not be unsuitable for organization.

2. Principle of verification
There must be evidence of all the documents which are preserved in an office. If the verification is not possible, it has no value as proof in court.

3. Principle of classification
All the records should be classified on the basis of nature of documents. Proper classification of records helps to avoid confusion. It helps in proper evaluation of business performance.

4. Principle of reasonable cost
While maintaining the record, the cost factor should be considered. Therefore, the valuable information should be recorded systematically and useless information should be disposed.

5. Principle of elasticity
The process of record management should be elastic in capacity i.e. it should be capable of being expanded or contracted according to requirement.

6. Principle of retention of records
The main objective of record management is to preserve the required document for future reference. The unnecessary document should be disposed. Therefore, according to value and importance of records should be preserved.

7. Principle of availability
Records are preserved for future reference. It should be protected in such a way that required information should be easily available. The records are useless if they are not available in the current time

Characteristics of Sole Trading Concern

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Some characteristics of sole trading concern:

1. Single ownership:
A sole proprietorship is wholly owned by one individual. The individual supplies the total capital from which his own wealth or from borrowed funds.

2. One man control:
The proprietor alone takes all the decisions pertaining to the business. He is not required to consult anybody. Ownership and management are vested in a person.

3. No legal entity:
A sole proprietorship has no legal entity separate from its owner. The law makes no distinction between the proprietor and the business. The assets and liabilities of the business and its proprietor are not different.

4. Unlimited liability:
Proprietor is liable for all the debts of the business. In case the assets are insufficient to meet the debts, the personal property of the proprietor can be attached.

5. No profit sharing:
The proprietor is all alone entitled for all the profits and the losses of the business. He bears the complete risk and there is nobody to share the risks, workload or any profit or losses.

6. Small size:
The scale of operation carried out by sole proprietor is generally small.

Types of cooperative organization

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

1. Producer co-operatives: Some co-operatives process and market their members’ products and services directly while others may also sell the input necessary to their members’ economic activities. Examples: Agriculture co-operatives, pooling of equipment, advisory services, etc.

2. Multi-stakeholder co-operatives: The membership of these co-operatives is made of different categories of members who share a common interest in the organization. Examples: home care services, health services, community services, etc.

3. Worker co-operatives: The purpose of these co-operatives is to provide their members with work by operating an enterprise. The co-operatives are owned by their employee members. Examples: forestry, leisure, production and manufacturing, tourism, communications and marketing, etc.

4. Worker-Shareholder co-operatives: These are incorporated co-operatives that hold partial ownership of the business in which the co-op’s members are employed. Because of its share capital, the co-operative may participate in the management of the business and the workers may influence work organization. Examples: production and manufacturing, technology, etc.

5. Consumer co-operatives: They provide their members with goods and services for their personal use. Examples: Food, credit unions, housing, insurance co-operatives, etc.

Filing Methods: Alphabetical, Numerical, geographical, chronological and subject wise

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Bases of classification of files

Classification of files refers to the process of selecting heading under which documents are grouped or classified on the basis of common characteristics. The bases of classification are as follows:

1. Alphabetical classification

The filing method under which files and folders are arranged in order of alphabets of the names of person or institution concerned with such file is alphabetical classification. It is the most popular and common method of filing. In case name of more than one person starts with same letter then the second letter of name is taken into consideration. It is a flexible method. It is used in both small and large organization.

Advantages

Simple and easy to understand
Doesn’t need a separate index
It is flexible

Disadvantages

Time-consuming
Difficult to arrange files
Difficult to locate in case of common names

2. Numerical classification

The filing method under which files and folders are arranged in order of number is called numerical classification. All files and folders are given separate numbers. It is an indirect method of classification of filing. In this filing alphabetical index is required. It includes name, address, phone number, subject and other information along with file number.

Advantages

Suitable for large offices having a large number of files and folders
An accurate method of filing
It is flexible
A separate index can be easily developed using numbers.

Disadvantages

It is expensive
It is time-consuming
Not suitable for small organization
It is not easy to operate
Separate alphabetical index is required.

3. Subjective classification

In this filing method, records are classified according to their subject; letters and documents are classified and arranged in files and folders into subject or sub-subject wise. In this filing, subject must be arranged alphabetically. It is widely used in those cases where subject is more important than the name of the person or organization. All documents relating to same subject are filed together in one file.

Advantages

Simple to operate
Flexible
Convenient
Easy to locate

Disadvantages

Not applicable for filing miscellaneous subject
Time-consuming
Difficult to locate when subject matter is not properly understood

4. Geographic classification

In this method, files are grouped according to the geographical location of firm, organization or person. Under this method name of places are written in file and are arranged in drawer either in alphabetical or numerical order whichever is suitable for organization. It is used in multinational companies or those organizations whose business and branches are located din many places of the nation or the world.

Advantages

Easy to understand and use
Can be arranged in alphabetical and numerical order
It used in those organizations whose business is engaged in correspondence with the businesses all over the globe or the nation.

Disadvantages

Expensive
Not suitable for small scale organization
Time-consuming
No use of card or index

5. Chronological classification

In this method, files and folders of documents are arranged in an order of their date, day, and time. In an office, several letters and documents may be received and dispatched. They all are arranged according to time and date when they were received and dispatched

Advantages

Simple to understand and easy to operate
Quickly located if their dates are known.
Less expensive

Disadvantages

Not suitable for large offices
When clear dates are not mentioned then there can be difficulty.

Importance of office management

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Some importance of office management are listed below:

1. Achievement of goals
Office management helps in increases office efficiency, smooth flow of work, maintaining public relations, minimization of cost, managing change and accepting the new challenges which help in achievement of goals of the organization.

2. Increases office efficiency
Office management focuses on office activities and helps office in economical way.

3. Smooth flow of work
Office management helps in performing efficient and effective office work. It helps in proper planning and effective control in office.

4. Public relations
There must be good public relation of the organization. The main purpose of public relation is to make the organization look trust worthy to all people who deal with it in all its action. It helps in increasing the goodwill of the organization.

5. Minimization of cost
Office management guides the use of capital, natural, financial, human and other resources effectively without leakage and wastage which helps in minimization of cost.

6. Managing change
Office management helps in implementation of plans in right time and in right way. Bu there may be change in resources, need, technology, preferences and so on which makes it necessary to bring about the change in plans. Office management makes the office flexible which helps to manage the change.

7. New challenges
In an office, to achieve goals, many challenges should be faced. It helps in improving the research and information system. It helps in managing all the rigid matters.

Characteristics of Multinational Companies

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Characteristics of multinational companies are given below:

1. Productive organization: this organization produces various types of goods and services. It is supplies in many countries. It uses its own technology, patent right for manufacturing goods.

2. Worldwide: multinational companies operate in whole world. It extends its business worldwide. It establishes many branches in various companies. They extend their business in more than one country.

3. Ownership and control: ownership of company remains on both parent and host country. Parent company control, manage and help in the operation of all host countries. They have control in capital, high technology, and trade mark.

4. Transfer of technology: these multinational companies are establishes with hug capital and advanced technology. It also transfers the technology in the host countries that can be used for production.

5. Marketing superiority: it is large organization which has international name and fame. It has good network worldwide for distribution of goods.

6. High efficiency: these organizations operate their business with efficiency. They use advanced technology. They also involve keenly in research works. They used many trained person that helps in the production of quality goods.

Concept of record management

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Concept of records
Records are the collective form of written data that are made for future use. They are the memory of the office record. Management is an art of handling and maintaining office records from the time of creation to the time of disposal. Office records are the informational documents used by the organization to carry out is major functions. It is also defines add the material and data prepared for future reference. It includes written papers, invoices, reports, vouchers, files etc.

Merits of multinational companies

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

1. Quality: it provides and produces quality goods. It produces goods which can satisfy the international customers too. It has huge investment and consists of trained and qualified personnel and specialists. It uses advanced technology to produce quality goods.

2. Mass production: it produces huge number of quality goods to satisfy the customers from all around the world. It must supply the goods constantly worldwide. Advanced technologies are used for mass production.

3. Low cost of production: the cost of production is also low. It produces goods in huge quantity which increases the rate of return and decreases in the cost of production. Low cost of production is the major benefit for multinational companies

4. Employment: it provides employment opportunities to large number of people from all around the world. Most of the host countries can help to solve the unemployment problems. It helps to maintain the living standard of people. It helps in consumer satisfaction too.

5. Increase in government revenue: multinational companies produce and sell the goods in large number of quantities. It earns abnormal profit. Government from both parent and host countries can collect custom duty, income tax, sales tax etc. In that way, government can earn more revenue.

6. Increase in export: it produces commodities in international standard. They are not produced to meet the needs of local people only. Host countries have the benefit of exporting the goods in other many countries of the world where the company has been or not established. It helps largely in the export business

7. Industrialization: multinational companies help in industrialization. It brings more capital in the business and help to establish industries. It also uses advance technologies to establish industries. It helps in establishment of industries in host country too.

Partnership deed : meaning and contents

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Partnership deed
The written agreement duly signed by the partners is known as partnership deed. It is also known as agreement or article of partnership. It is the document, which mentions the rules and regulations, way of operation of management and way of control of activities of the firm. It is also required at the time of registration. It helps to minimize conflict and misunderstanding among the partners.

Content of partnership deed

Name and address of the firm
Name and address o the partners
Nature of rim’s business
Duration of partnership
Amount of capital invested by the partners.
Interest on capital
Division of profit
Salary and commission
Right and duties of partner
Admission and removal of partnership
Valuation of capital and goodwill at the time of admission, death and retirement of partners
Accounts and audits
Dissolution of partnership.